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2011 Supreme(Bom) 61
High Court of Judicature at Bombay
ANOOP V. MOHTA
Union of India
Versus
M/s. Sagar Thermit Corp. Ltd.
ARBITRATION PETITION NO. 182 OF 2006
Decided on : 14-01-2011
For the Petitioner:T.J. Pandiyan, Advocate.
For the Respondent:Uday Samudrala, Advocate.
The court's decision was influenced by the specific provisions of the Contract, GCC, and the Arbitration and Conciliation Act, 1996 in determining the entitlement to claims and counter claims, compensation, and interest.
Headnote:
Arbitration - Rail Contract Dispute - Arbitration and Conciliation Act, 1996, Section 21, 85, 63, 64 - GCC, Clause 17, 45, 16(3), 37 - Central Railway-1990, item 18202 - Special condition No.5 - General Manager, Northern Railways and Anr. Vs. Sarvesh Chopra, AIR 2002 S.C. 1272 - Ramnath International Construction Pvt. Ltd. Vs. Union of India & Anr. 2007(2) S.C.C. 453= AIR 2007 S.C. 509 - R.S. Jiwani (M/s.), Mumbai Vs. Ircon International Ltd., Mumbai, 2010 (1), Mh.L.J. 547
Fact of the Case:
The Petitioners challenged an Award by the Arbitrator in a rail contract dispute. The Respondents were awarded a contract for rail work, completed it after extensions, and raised disputes. The Arbitral Tribunal awarded nine out of thirteen claims in favor of the Respondents.
Finding of the Court:
The court rejected the Petitioners' counter claim due to delay in execution of work and upheld various claims of the Respondents based on the terms of the contract and the Arbitration and Conciliation Act, 1996. The court modified the award and partly allowed the Petition.
Issues: Dispute over contract work completion, extension of time, claims and counter claims, entitlement to compensation, and interest on awarded amount.
Ratio Decidendi: The court considered the specific provisions of the Contract, GCC, and the Arbitration and Conciliation Act, 1996 to determine the entitlement to claims and counter claims, compensation, and interest.
Final Decision: The Petition was partly allowed, and the rest of the award was maintained.
Heard finally.
2. The Petitioners have challenged an Award dated 16 December 2005 passed by the Arbitrator appointed in a dispute arising out of a Contract Agreement for Works dated 17 December 1999, between the parties with regard to a rail contract work.
3. The basic facts are:
On 21.09.1999, the Respondents were awarded with a contract of work of Cutting and Cropping of Rails and Almino Termite welding of Rails by SKV process between Kurduwad – Pandharpur Guage – Conversion Project at a tendered cost of Rs.1,21,07,000/- with a condition of completion period of 5 months from the date of acceptance/award of the contract i.e. 21/09/1999 and accordingly the work was to be completed on or before 21/2/2000.
4. On 31.01.2001 the work was completed by the Respondents after obtaining 5 extensions. The joint measurements were done in the presence of the contractor.
5. On 20.08.2001 and 21.02.2003, the Respondents however had raised disputes/claims and pursuant to the Order of this Court dated 21.02.2003, the Arbitral Tribunal was constituted. The Respondents submitted various claims, thereafter also.
6. The Petitioners had refuted the claims of the Respondents as the same were “Excepted matters” in view of the specific provisions of the Contract.
7. On 16.12.2005 the Arbitral Tribunal by rejecting the counter claim of the Petitioners, awarded nine out of thirteen claims, in favour of the Respondents (original claimants).
8. The Respondents Original Claimants, called upon the Petitioners/Respondents to compensate financial loss vide letter dated 20th August, 2001, and called upon to appoint an Arbitrator under Clause 64 of General Conditions of Contract (for short, “G.C.C.”). The Respondents, did not response, ultimately filed an Application No. 246 of 2002 in the High Court at Bombay for referring all the claims raised in letter dated 1st August, 2001 and contested a counter claim so made by the Petitioners. By order dated 21st February, 2003, this Court referred all the claims and counter claims before the Arbitrators, by directing to appoint Arbitral Tribunal. The arbitral tribunal was constituted on 14/08/2003.
9. The Petitioners’ counter claim for an amount of Rs.1,61,50,000/- was rejected totally on the ground of delay in execution of work. Admittedly, by consent of the parties, the time was extended from time to time. The counter claim was made for the first time in the letter dated 14/08/2003. It was not specifically raised though Arbitration Proceedings commenced as per Section 21 and 85 of the Arbitration and Conciliation Act, 1996 (for short, “the Act”) on the date of appointment of Arbitrator, dated 20th August, 2001. It was not supported by any evidence and/or material on record except bare averments. The Petitioners did not even lead any evidence to support the counter claims before the Arbitral Tribunal. Therefore, as it was speculative in nature, it was not considered by the Arbitral Tribunal at all. The learned counsel appearing for the Petitioners fairly conceded to the position during the course of hearing in this proceedings also.
10. Admittedly, pursuance to clause 17 of GCC, the Respondents applied for extension from time to time stating reasons for delay. The Petitioners extended the time with clear terms of no claim or compensation based upon the same. In view of this agreed terms, there is force in the contention raised by the Petitioners’ counsel that the Respondents-Original Claimants are not entitled for any claims arising out of and/or because of delay in completion of the project though time was extended. The extension was granted with token penalty of Rs.5000/- per month; was due to abnormal delay in execution of work and partly because of slow and tardy progress of the work. The Petitioner paid to the Respondents as per the statements submitted on a regular intervals; based upon the jointly signed records and documents. The claimant completed the final work on 20th March, 2001. However
